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When an agency changes hands

When an agency changes hands

Does the transferring employee's service with the old employer count as service with the new employer?

Buying another agency or purchasing a rent roll is something many real estate Principals will go through at some point in their business life and taking on some or all of the employees of the business being sold is not uncommon. Here are some key things you need to consider when it comes to transferring employee entitlements.

Whether buying a complete real estate business or simply a rent roll, it’s common for some or all of the existing employees of the seller (the old employer) to be offered a position in the buyer’s business (the new employer).

 

Unfair dismissal claims

Where a new employer wants to exclude a transferring employee from being able to make an unfair dismissal claim for the excluded period* provided for in the Fair Work Act 2009, they must advise the employee in writing that service with the old employer won’t be recognised.

If this doesn’t occur, then the period of service with the old employer will count towards service with the new employer.

This means that, as the new employer, if you dismiss a transferring employee inside the unfair dismissal qualifying period, a claim can still be made against you.

To address this issue, REEF can provide you with the appropriate wording to include in a transferring employee’s Employment Agreement.

* The excluded period for a small business with less than 15 employees is 12 months and 6 months for all other businesses.

 

Notice of termination

The amount of notice you must give an employee when terminating them is determined by the length of their service and their age.

A new employer is bound to recognise a transferring employee’s service with the old employer, unless the employee received the appropriate notice of termination (or pay in lieu) from the old employer.

Therefore, you should ensure that the old employer provides all transferring employees with the appropriate notice.

 

Personal/carer’s leave, long service leave and parental leave

The new employer is bound to recognise an employee’s service with the old employer when calculating the entitlement to personal/carer’s leave, long service leave and parental leave. These entitlements must carry over to the new employer.

Therefore, as the new employer, you should carefully consider the liability you will be assuming for such entitlements when the transferring employees start employment with you.

 

Annual leave

As a new employer, you have the option of whether or not to recognise a transferring employee’s service with the old employer for annual leave purposes.

It’s common for new employer’s to insist that the old employer discharge their annual leave obligations in relation to all transferring employees.

 

The bottom line

When buying an agency or purchasing a rent roll, it’s essential for both the new and old employers to understand their respective obligations. If you have questions, give REEF a call on 1300 616 170. Our Workplace Relations Advisors are on hand to answer your questions.

 



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About REEF

The Real Estate Employers' Federation is the real estate industry’s leading not-for-profit employer and workplace relations advisory association. It has more than 1600 members and subscribers across Australia.

Each year, REEF receives more than 18,000 calls from real estate employers needing help and guidance on matters affecting the employment relationship.

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